IPO burst follows gains in market

Published: Friday, Sept. 20, 2013 7:23 p.m. CST

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The stock market has been heating up, driving demand for IPOs.

There have been 140 initial public offerings of stock this year, up 46 percent from the same time in 2012, according to IPO tracking firm Renaissance Capital. Of the eight companies that went public this week, two – cybersecurity software maker FireEye and technology advertising company RocketFuel – nearly doubled in value Friday.

The pace does not appear be slowing down. Next week, market watchers expect as many as 13 more companies to make their debuts. If all of them price, it will be the most IPOs in the U.S. in one week since 2007, when 14 hit the market at once, according to data provider Dealogic.

With the stock market hitting new highs, investors want to take chances they might not otherwise take in a flat or down market, said Scott Sweet, senior managing partner at IPO Boutique, which researches and invests in IPOs.

The Standard & Poor’s 500 index, a broad gauge of the stock market, has risen nearly 5 percent this month. If that holds, it would be the index’s best monthly performance since January.

How many companies are going public and how much money they’re raising reflect investors’ confidence and taste for taking risks. A rising stock market can make investors feel more optimistic about the general business climate and more eager to take a chance. Companies can grow quickly after an IPO, adding jobs and making investments with the new cash.

The success of some prominent IPOs in recent years, such as Michael Kors Holding Ltd., has also helped increase investors’ appetite, said Josef Schuster, an IPO analyst.